STOCKS
Most Equity markets took a small breather on Thursday-Friday last week after the bear-mauling over the last couple of weeks. Asian markets are up a bit today morning. Trump has tweeted about talking to China, and there is a thin window of opportunity available for him to put things right again in the world. For instance, the CBOE VIX (18.47) has come down from a high of 24.1 on Thursday and could have room to fall towards 16-14 also. However, we also think caution is warranted as Trump’s voice is still laced with his customary braggadocio.
Although the Nikkei (20543, +0.61%) and Shanghai (2831, +0.24%) are trading slightly higher, they have to sustain the gain and rise past 20700 and 2875 respectively to have a chance at bullishness. Note that 2875 is a strong Resistance on the Shanghai that could yet push the market down to 2700.
There is a small chance of a Double Bottom on the KOSPI (1935, +0.42%) while above 1900, but needs to rise past 1960 to attract more buying.
The Nifty (11047.80, +0.17%) might outperform the Shanghai with the Nifty holding above Support at 10900 on the Weekly Candles but it needs to rise past 11100 (21-day MA) at least to have a stab at bullishness. Similarly, the Sensex (37350) has Support near 36900, but needs to break above 38100 in order to acquire bullishness.
In Europe, the DAX (11562.74, +1.31%) has seen a decent rally from the low of 11266.48 (15-Aug) but faces a crucial Resistance near 11650 on the Daily Candles today. Failure to break above that could send it down all over again.
A similar picture is seen on the Dow (25886.01, +1.20%) which rose well enough over Thursday-Friday last week, but now needs to break above 26100 this week in order to beat back the Bears.
All in all, as said earlier, the global Equity markets might have a chance of recovery (if Trump softens up a little) but are still vulnerable to the downside if he doesn’t. Wait and watch.
COMMODITIES
Commodities look mixed. Gold and Silver can consolidate in the near-term. Copper is bearish and can fall while it trades below 2.64. Brent and WTI has inch higher in the near-term, but the resistances can cap the upside and drag it lower again.
Gold (1511) looks mixed and can remain range bound between 1500 and 1540 for some time. A strong break above 1540 is needed for it to move further higher.
Similarly, Silver (17.04) can trade sideways between 16.8 and 17.4 in the near term. Within this range, it can dip in the coming sessions to towards the lower end of the range.
Copper (2.59) has strong resistance at 2.64. While below this resistance, the short-term outlook is bearish for it to break 2.55 and fall to 2.50% in the coming days.
Brent (59.21) can test 60.5 in the coming sessions and then can fall-back to 58 again. As mentioned earlier, broadly Brent can trade between 58 and 62. The bias is negative to see a break and fall below 58 towards 56-55 in the near term.
WTI is holding above 54, but seems to lack strength. Near-term resistances are at 56.20 and 56.45 which can cap the upside and keep it pressured on the downside to break below 54 and test 52.
FOREX
Dollar remains bullish and the Euro can fall in the near term. Dollar-Yen and Aussie can consolidate in the near-term before witnessing a fresh rise. Pound is bullish in the near term. The USDCNY and USDINR can rise in the coming days.
The Dollar Index (98.10) can rise to 99-99.15 on a strong break above 98.30. Supports are at 98 and 97.85 which can limit the downside.
Euro (1.1091) is bearish to test 1.1030 and 1.1000 on the downside. A break below 1.1080 can accelerate the fall. Near-term resistance is in the 1.1110-1.1115 region.
Dollar-Yen (106.30) continues to trade mixed and unclear. As mentioned earlier, it can remain sideways between 105 and 107 and our bias within this range is positive for it to break 107 and rise to 108.5-109 in the medium term.
EUR-JPY (117.89) can see an intermediate rise to 118.5 or 119 in the near-term while it holds above 117.5. But the broader view remains bearish for it to test 116 on the downside. A strong break below 117.5 will trigger this fall.
Aussie (0.6775) remains stable and can continue to trade sideways between 0.6735 and 0.6835 for some more time. We expect the Aussie to break this range above 0.6835 and rise to 0.69 and 0.70 in the short term.
As expected, Pound (1.2145) continues to move higher and keeps the near-term bullish view intact to test 1.22-1.23 on the upside.
USDCNY (7.0420) has inched higher and can revisit 7.06 levels in the near-term. Support is at 7.015.
USDINR (71.1550) dipped but bounced from the low of 71.04 on Friday. Unless the pair declines below 71 on early trades, a rise to 71.80 cannot be ruled out in the coming days.
INTEREST RATES
The US Treasury yields have bounced slightly. Though there is room for a corrective rally, the bigger picture continues to remain weak and the US Treasury yields can fall again in the coming days after this intermediate bounce. The German yields have dipped slightly and retains its bearish view. The10Yr GoI can dip to test the 6.50%-6.48% region and then can bounce again.
The US Treasury yields have bounced across tenors. The 5Yr (1.45%) and 10Yr (1.59%) are up 3 bps and the 30Yr (2.08%) is up 4 bps. The 2Yr (1.50%) was marginally higher by 1 bps. The broader picture continues to remain weak and the upside is likely to be capped. The 30Yr has strong resistance at 2.15% from where it can fall again. The 5Yr has immediate resistance at 1.48% which has to be broken to move further higher.
The German yields have dipped across tenors. The 2Yr (-0.93%), 5Yr (-0.90%) and 10Yr (-0.69%) were down 1 bps each while the 30Yr remained stable at -0.22%. The bearish view remains intact. The 10Yr can move down to test -0.83% in the coming weeks.
The 10Yr GoI (6.5426%) has dipped below 6.56% after testing 6.62% on the upside. Support is in the 6.50%-6.48% which can be tested and limit the downside in the near term. A bounce from there will see the 10Yr GoI revisiting 6.55% and 6.60% in the coming days.
